Existing law vests the Department of Transportation with full possession and control of all state highways and all property and rights on property acquired for state highway purposes. Various provisions of existing law specifically provide for the acquisition, transfer, and use of property owned by the department.

This bill would, with respect to a parcel that the department transferred to the City of Lynwood, require the department, upon request from the city, to develop and enter into an agreement with the city to release and remove a deed restriction imposed on that parcel if the city agrees to transfer the deed restriction to another specified parcel and other certain other requirements are met. If the city and department enter into this agreement, the bill would require the city to submit reports to the Legislature, and specified committees of the Legislature, at prescribed intervals on the use of this authority to develop those parcels.

This bill would make legislative findings and declarations as to the necessity of a special statute for the City of Lynwood.

Existing law vests the Department of Transportation with full possession and control of all state highways and all property and rights on property acquired for state highway purposes. Various provisions of existing law specifically provide for the acquisition, transfer, and use of property owned by the department.

This bill would, with respect to a parcel that the department transferred to the City of Lynwood, require the department, upon request from the city, to develop and enter into an agreement with the city to release and remove a deed restriction imposed on that parcel if the city agrees to transfer the deed restriction to another specified parcel and other certain other requirements are met. If the city and department enter into this agreement, the bill would require the city to submit reports to the Legislature, and specified committees of the Legislature, at prescribed intervals on the use of this authority to develop those parcels.

This bill would make legislative findings and declarations as to the necessity of a special statute for the City of Lynwood.

Existing law requires, on or before January 1, 2027, an air pollution control district or an air quality management district the jurisdiction of which includes metal shredding facilities, in consultation with the Department of Toxic Substances Control and the Office of Environmental Health Hazard Assessment to develop requirements for facilitywide fence-line air quality monitoring at metal shredding facilities, as defined. Existing law authorizes any reasonable regulatory costs incurred by a district in implementing these provisions to be reimbursed pursuant to the fee authority of the district.

This bill, if a district has regulations and rules governing metal shredding facilities that have been implemented as of January 1, 2026, would authorize instead of require the district to implement these requirements. The bill would require the district regulations and rules to include, but not be limited to, facility registration, fenceline or alternative monitoring technologies compliance methods, or other methods to reduce emissions from metal shredding facilities, as specified. The bill would also require, rather than authorize, any reasonable regulatory costs incurred by a district in implementing these provisions to be reimbursed by the owner or operator of a metal shredding facility.

Existing law requires the Department of Toxic Substances Control to establish the Hazardous Waste Resource and Research Coordination Program, which consists of a database of known hazardous waste research and a pool of research consultants qualified in the field of hazardous waste management, as provided. Existing law requires the department to assemble and annually update a bibliographic cross-referenced database containing certain information on known hazardous waste research programs, including the specific problems facing hazardous waste generators that the research is designed to address. The department is required to make the information in the database on known hazardous waste research programs available to the public at a cost not greater than the departments printing and mailing costs.

This bill would require the department to also post the information described above on its internet website. The bill would require the department, on or before July 1, 2026, to convene a stakeholder working group to identify potential technologies to reduce the generation of hazardous waste.

CONCURRENCE IN SENATE AMENDMENTS

CSA1 Bill Id:AB 1338

Author:(Solache)

As Amended Ver:June 10, 2026

Majority vote

SUMMARY

Requires the California Department of Transportation (Caltrans), upon request from the City of Lynwood, to develop and enter into an agreement with the city to transfer the deed restriction imposed on a property to an adjacent property.

Senate Amendments

1. Define “Fernwood Avenue property” to mean the parcel owned by the City of Lynwood, located in the City of Lynwood between Fernwood Avenue and Imperial Highway, legally described and identified as Parcels 1 and 2 in the City of Lynwood Certificate of Compliance having Instrument Number 20250434105, and to be developed as affordable and market-rate housing.
2. Define “Imperial Highway property” to mean the parcel located in, and owned by, the City of Lynwood, legally described in the California Department of Transportation Director’s Deed having Instrument Number 20170260321, and formerly identified as the California Department of Transportation Parcel Number DD 058166-01-01.
3. Require Caltrans, upon request from the City of Lynwood, to develop and enter into an agreement with the city to release and remove the deed restriction imposed on the Imperial Highway property if all the following requirements are met:
4. The City of Lynwood agrees to transfer the deed restriction to the Fernwood Avenue property.
5. The Fernwood Avenue property is equal to or greater in size than the Imperial Highway property.
6. The Fernwood Avenue property is appraised at a value equal to, or greater than, the appraised value of the Imperial Highway property on a per-acre basis.
7. The deed restriction to be applied to the Fernwood Avenue property is 45 years, beginning on the date that the deed restriction is recorded.
8. Stipulate that the appraised value of the Imperial Highway property shall be based on the appraised value of the parcel at the time of its acquisition from the department, and the appraised value of the Fernwood Avenue property shall be based on the appraised value of the parcel at the time of the transfer of the deed restriction.
9. Require the City of Lynwood, if they enter into an agreement with Caltrans, to submit a report to the Legislature, including the Assembly and Senate Committees on Transportation, on the use of the bill to develop the Imperial Highway property and the Fernwood Avenue property.
10. Require the report to be submitted within one year of the agreement and annually thereafter until the planned development projects are completed.
11. Require each report to include, but not be limited to, all of the following:
12. Plans for the development of the properties, including types of development.
13. The status of any pending projects on the properties.
14. The number of affordable housing units, affordability level, and size of units.
15. Any public financing or grants that were used to build the developments.
16. Declare that a special statute is necessary because of the unique nature of the Imperial Highway property located in the City of Lynwood in the County of Los Angeles and the state’s goal and commitment to affordable and market-rate housing.

COMMENTS

Under current law, Caltrans can sell or exchange property considered “excess,” meaning real property acquired by the state for a transportation purposes that is no longer necessary for those purposes. Excess property is sold at auction, either by an oral public auction or a sealed bid auction. Under certain circumstances, excess property may be offered for sale directly to adjoining property owners. It may also be offered for direct sale to public agencies if the property is to be used for a public purpose. Under state and federal law, Caltrans must set the price of excess property at current fair market value, however, Caltrans can offer property to public agencies for less than fair market value for continued public use, such as parks.

The California Transportation Commission (CTC) is tasked with developing the terms, standards, and conditions for any property sale. Additionally, CTC approves the final sale or transfer of any excess property at a public meeting.

The Federal Highway Administration (FHWA) also has requirements for the sale or lease of any excess real property in which federal funds were used in the original acquisition. This includes, as mentioned previously, that current fair market value must be charged, except for certain public interest exceptions, and the property must continue to be dedicated for a public use, as defined and allowed by FHWA. State departments of transportation must apply to FHWA for approval of transaction prior to action by CTC.

City of Lynwood purchased Caltrans property and cleaned it up. The City of Lynwood is in Los Angeles County located near South Gate and Compton and has a population of roughly 67,000. The city owns multiple adjoining parcels of land directly adjacent to Interstate 105 in the west part of the city that were purchased at two different times from Caltrans as part of the department’s excess property process. The city purchased for fair market value both the so-called Fernwood Avenue property in 2004 and the Imperial Highway property from Caltrans in 2016.

As a condition of the sale, the Caltrans Director’s Deed required that it be used exclusively for public purposes for 15 years from the recorded date of the deed. The deed also states that if the property ceases to be used exclusively for public purposes Caltrans may terminate the deed, and the property would revert to Caltrans. Current state law does not define what a public purpose is for the purposes of Caltrans and CTC’s approval processes.

In authorizing the purchase of the Imperial Highway property, in 2016, the City of Lynwood approved a resolution stating that the purchase of the property would further the aims of the Housing Authority to promote the development and construction of low- and moderate-income housing opportunities in the city. Further, that the property is part of the larger site, when coupled with the previously purchased Caltrans property, and noting that the full site required major environmental remediation to be ready for development. Subsequently, the city spent approximately $10 million on the environmental cleanup.

The City of Lynwood has been working with a developer to design and construct a mixed-use development which would encompass both the Fernwood Avenue property and the Imperial Highway property. The planned development would include commercial buildings, affordable apartments, and for-sale townhomes. The entire project has been environmentally cleared.

LACDA’s most recent guidelines, published April 2026 prior to a new round of funding, included language specifically stating that housing projects located within 500 feet of a freeway may only be considered for funding if all other eligible projects have been considered for funding and funds are still available. Overall state and local policy discourage building affordable housing projects within 500 feet of a freeway, due to health concerns, especially regarding air quality. Only recently, with the passage of AB 2243 (Wicks, Chapter 272, Statutes of 2024), the Legislature expanded which housing projects are eligible for streamlined, ministerial review to those on a site located within 500 feet of a freeway.

As described above, both properties that would include the multi-use development were purchased through the Caltrans excess property process. Both contained a 15-year deed restriction requiring the property to be used for a public purpose. Although public purpose is not defined in state law, the city expressed its intent to build affordable housing on the site. The 15-year clock on the Fernwood Avenue property has run out, meaning the city may develop the property for any type of use, including commercial. However, the deed restriction on the Imperial Highway property still has roughly 6 years.

The problem identified by the city and the reason for this bill is that the Imperial Highway Property abuts Interstate 105, within 500 feet, and would therefore not be able to compete for needed affordable housing funds. Additionally, as mentioned, there are serious health and safety concerns with building housing that close to the freeway and it would require mitigation.

This bill would essentially swap the deed restriction requiring development for public purposes from the Imperial Highway property to the Fernwood Avenue property. The city and the developer have moved forward with the project, planning for the Imperial Highway deed restriction to either be cancelled or swapped. As noted, they are ready to move forward with construction of the commercial development, which is currently slated for the Imperial Highway property site. Phase II of the project to build the residential units is being designed for the Fernwood Avenue site.

This bill requires Caltrans, upon request from the city, to develop and enter into an agreement to release and remove the deed restriction imposed on the Imperial Highway property and further defines the requirements for the agreement including:

1. The city agrees to transfer the deed restriction to the Fernwood property.
2. The Fernwood Avenue property is equal to or greater in size than the Imperial Highway property.
3. The Fernwood Avenue property is appraised at a value equal to, or greater than, the appraised value of the Imperial Highway property on a per-acre basis.
4. The deed restriction for the Fernwood Avenue property is 45 years.

According to the Author

“AB 1338 would help the City of Lynwood resolve a unique land utilization issue in order to develop a mix of affordable housing and retail space for the benefit of the surrounding, underserved community. The larger project area will be designed and developed to provide affordable housing and public benefit to the City and would ensure that the public use remains for an extended time.”

Arguments in Support

Writing in support of the bill, Los Angeles County Supervisor Janice Hahn states, “California is in a housing crisis, and the State has made housing production one of its most urgent priorities. AB 1338 reflects exactly the kind of local-state partnership and creative problem-solving that is needed to meet that challenge. The City of Lynwood is a fully built-out community with limited land available for new development. Every city-owned parcel is precious, and the City has worked diligently to make the most of this one — completing environmental remediation, complying with the Surplus Land Act, and engaging in a thorough disposition process. AB 1338 removes the last structural barrier standing between Lynwood and the housing its residents need.”

Arguments in Opposition

None on file.

FISCAL COMMENTS

Unknown.

VOTES:

ASM ENVIRONMENTAL SAFETY AND TOXIC MATERIALS: 7-0-0

YES: Connolly, Hadwick, Hart, Castillo, Lee, McKinnor, Papan

ASM APPROPRIATIONS: 15-0-0

YES: Wicks, Sanchez, Arambula, Calderon, Caloza, Dixon, Elhawary, Fong, Mark González, Hart, Pacheco, Pellerin, Solache, Ta, Tangipa

ASSEMBLY FLOOR: 74-3-2

YES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Castillo, Chen, Connolly, Davies, Dixon, Elhawary, Flora, Fong, Gabriel, Gallagher, Garcia, Gipson, Mark González, Hadwick, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, McKinnor, Muratsuchi, Ortega, Pacheco, Papan, Patel, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NO: DeMaio, Ellis, Patterson

ABS, ABST OR NV: Jeff Gonzalez, Nguyen

UPDATED

VERSION: June 10, 2026

CONSULTANT: Farra Bracht / TRANS. / (916) 319-2093 FN: 0004305

 THIRD READING  

Bill No: AB 1338

Author: Solache (D)

Amended: 6/10/26 in Senate

Vote: 21

SENATE TRANSPORTATION COMMITTEE: 12-0, 6/30/26

AYES: Cortese, Strickland, Archuleta, Arreguín, Blakespear, Dahle, Grayson, Menjivar, Richardson, Seyarto, Valladares, Wiener

NO VOTE RECORDED: Gonzalez

SENATE APPROPRIATIONS COMMITTEE: Senate Rule 28.8

ASSEMBLY FLOOR: 74-3, 5/27/25 - See last page for vote

SUBJECT: Department of Transportation: transferred property: City of Lynwood

SOURCE: City of Lynwood

DIGEST:

This bill requires the California Department of Transportation (Caltrans), upon request from the City of Lynwood, to develop and enter into an agreement with the city to transfer the deed restriction imposed on a property, as defined, to an adjacent property.

ANALYSIS:

Existing law:

1. Vests Caltrans with full possession and control of all state highways and all property and rights on property acquired for state highway purposes.
2. Authorizes Caltrans to acquire, either in fee or in any lesser estate or interest, any real property that it considers necessary for state highway purposes.
3. Defines “excess real property” to mean all land and improvements situated outside of calculated highway right-of-way lines not needed or used for highway or other public purposes, including, but not limited to, those leased to public agencies, as defined, and available for sale or exchange.
4. Requires Caltrans to adopt rules and regulations to determine which real property outside of calculated right-of-way lines is no longer needed or used for highway or other public purposes, and which is available for sale or exchange.

1. Authorizes Caltrans, if they determine that real property or an interest therein, previously or hereafter acquired by the state for highway purposes, is no longer necessary for those purposes, to sell, contract to sell, sell by trust deed, or exchange the real property or interest therein in the manner and upon terms, standards, and conditions established by the California Transportation Commission (CTC).

This bill:

1. Defines “Fernwood Avenue property” to mean the parcel owned by the City of Lynwood, located in the City of Lynwood between Fernwood Avenue and Imperial Highway, legally described and identified as Parcels 1 and 2 in the City of Lynwood Certificate of Compliance having Instrument Number 20250434105, and to be developed as affordable and market-rate housing.
2. Defines “Imperial Highway property” to mean the parcel located in, and owned by, the City of Lynwood, legally described in the Caltrans Director’s Deed having Instrument Number 20170260321, and formerly identified as the Caltrans Parcel Number DD 058166-01-01.
3. Requires Caltrans, upon request from the City of Lynwood, to develop and enter into an agreement with the city to release and remove the deed restriction imposed on the Imperial Highway property if all the following requirements are met:
4. The City of Lynwood agrees to transfer the deed restriction to the Fernwood Avenue property.
5. The Fernwood Avenue property is equal to or greater in size than the Imperial Highway property.
6. The Fernwood Avenue property is appraised at a value equal to, or greater than, the appraised value of the Imperial Highway property on a per-acre basis.
7. The deed restriction to be applied to the Fernwood Avenue property is 45 years, beginning on the date that the deed restriction is recorded.
8. Stipulates that the appraised value of the Imperial Highway property shall be based on the appraised value of the parcel at the time of its acquisition from the department, and the appraised value of the Fernwood Avenue property shall be based on the appraised value of the parcel at the time of the transfer of the deed restriction.
9. Requires the City of Lynwood, if they enter into an agreement with Caltrans, to submit a report to the Legislature, including the Assembly and Senate Committees on Transportation, on the use of the bill to develop the Imperial Highway property and the Fernwood Avenue property.
10. Requires the report to be submitted within one year of the agreement and annually thereafter until the planned development projects are completed.
11. Requires each report to include, but not be limited to, all of the following:
12. Plans for the development of the properties, including types of development.
13. The status of any pending projects on the properties.
14. The number of affordable housing units, affordability level, and size of units.
15. Any public financing or grants that were used to build the developments.
16. Contains findings and declarations to support the purpose of the bill.
17. Declares that a special statute is necessary because of the unique nature of the Imperial Highway property located in the City of Lynwood in the County of Los Angeles and the state’s goal and commitment to affordable and market-rate housing.

Comments

1. Purpose of the bill. According to the author, “AB 1338 would help the City of Lynwood resolve a unique land utilization issue in order to develop a mix of affordable housing and retail space for the benefit of the surrounding, underserved community. The larger project area will be designed and developed to provide affordable housing and public benefit to the City and would ensure that the public use remains for an extended time.”
2. Caltrans excess property. Under current law, Caltrans has the ability to sell or exchange property considered “excess,” meaning real property acquired by the state for a transportation purposes that is no longer necessary for those purposes. Excess property is sold at auction, either by an oral public auction or a sealed bid auction. Under certain circumstances, excess property may be offered for sale directly to adjoining property owners. It may also be offered for direct sale to public agencies if the property is to be used for a public purpose. Under state and federal law, Caltrans must set the price of excess property at current fair market value, however, Caltrans can offer property to public agencies for less than fair market value for a continued public use, such as parks. CTC is tasked with developing the terms, standards, and conditions for any property sale. Additionally, CTC approves the final sale or transfer of any excess property at a public meeting.
3. City of Lynwood purchased Caltrans property and cleaned it up. The City of Lynwood is a city in Los Angeles County located near South Gate and Compton and has a population of roughly 67,000. The city owns multiple adjoining parcels of land directly adjacent to Interstate 105 in the west part of the city that were purchased at two different times from Caltrans as part of the department’s excess property process. The so-called Fernwood Avenue property was purchased by the city in 2004. The so-called Imperial Highway property was purchased from Caltrans in 2016.

Both properties were purchased for fair market value and approved by CTC. As a condition of the sale, the Caltrans Director’s Deed, which conveyed the property, required that it be used exclusively for public purposes for a period of 15 years from the recorded date of the deed. The deed also states that if the property ceases to be used exclusively for public purposes Caltrans may terminate the deed, and the property would revert to Caltrans. Current state law does not define what a public purpose is for the purposes of Caltrans and CTC’s approval processes.

The property is part of the larger site, when coupled with the previously purchased Caltrans property, and noting that the full site required major environmental remediation to be ready for development. The city spent approximately $10 million on environmental cleanup.

1. Now the City wants to develop the property. The City of Lynwood has been working with a developer to design and construct a mixed-use development which would encompass both the Fernwood Avenue property and the Imperial Highway property. The planned development would include commercial buildings, affordable apartments, and for-sale townhomes. Specifically, the project is broken into two phases. Phase I includes commercial development with four new commercial buildings, including three drive-thrus and one multi-tenet retail space. Phase II includes a 54-unit affordable apartment complex. Half of the affordable units would be restricted for very low-income households, earning less than 50% Area Medien Income (AMI), and the remaining half for low-income households, earning less than 60% AMI. Phase II also includes 20 for-sale townhomes.

According to the City of Lynwood, the entire project has been environmentally cleared. The Phase I commercial development is ready to go to construction. The Phase II residential projects are currently in the design phase. Phase II would be partially funded by revenue from the commercial development. Additionally, the city is working with the developer on possible funding sources for the affordable housing components of the residential project. Specifically, the city is working with the Los Angeles County Development Authority (LACDA), which provides grant and loans from the Affordable Housing Trust Funds for capital funding, Section 8 Project-Based Vouchers (PBVs), and Project-Based Veterans Affairs Supportive Housing (PBVASH) Vouchers for the creation and operation of eligible permanent affordable multifamily rental housing units. However, the location of property for the Lynwood development may put the project in jeopardy. LACDA’s most recent guidelines, published April 2026 prior to a new round of funding, included language specifically stating that housing projects located within 500 feet of a freeway may only be considered for funding if all other eligible projects have been considered for funding and funds are still available.

1. The City can’t locate the housing where the deed restrictions are. As described above, both properties that would include the multi-use development were purchased through Caltrans excess property process. Both contained a 15-year deed restriction requiring the property to be used for a public purpose. Although public purpose is not defined in state law, the city expressed its intent to build affordable housing on the site. The 15-year clock on the Fernwood Avenue property has run out, meaning the city may develop the property for any type of use, including commercial. However, the deed restriction on the Imperial Highway property still has roughly 6 years.

The problem identified by the city and the reason for this bill is that the Imperial Highway Property abuts Interstate 105, within 500 feet, and would therefore not be able to compete for needed affordable housing funds. Additionally, as mentioned, there are serious health and safety concerns with building housing that close to the freeway and it would require mitigation.

1. The City needs to swap. This bill would essentially swap the deed restriction requiring development for public purposes from the Imperial Highway property to the Fernwood Avenue property. The city and the developer have moved forward with the project, planning for the Imperial Highway deed restriction to either be cancelled or swapped. Specifically, this bill requires Caltrans, upon request from the city, to develop and enter into an agreement to release and remove the deed restriction imposed on the Imperial Highway property. This bill further defines the requirements for the agreement. Additionally, to keep the Legislature up to date on the development project, the bill requires the city to submit an annual report on the use of the provisions of the bill to develop the properties.
2. Do we need a bill to make it happen? The City of Lynwood originally contacted Caltrans District 7 in 2023 to request the removal of the deed restriction. Caltrans informed the city that the deed restriction was included pursuant to CTC’s procedures for the sale of excess property, and that Caltrans did not have authority to approve the city’s request to reassign the deed restriction and stating that, “parties are legally bound to follow the terms in the agreement.” According to the author, he contacted CTC in February 2025 on behalf of the city. The city and author communicated numerous times with CTC over the course of 2025, but no final resolution was reached. Additionally, the author introduced AB 1168 in 2025 to require Caltrans to release and remove the deed restriction on the Imperial Highway property. The bill did not move forward; however, the author sent a letter co-signed by Assembly Transportation Chair Wilson to CTC in August 2025 requesting assistance with the matter.

It is unclear who has the authority to possibly come to agreement with the city through administrative means and whether it is allowable under state law and policy. Caltrans is responsible for the identification, sale, and transfer of its excess property, including issuing a Director’s Deed with the terms of the sale and any restrictions. However, CTC is ultimately responsible for approving those actions through a vote of the commission in a public meeting.

Additional questions arise as to what activities are considered development for a public purpose under state and federal law and regulations. As mentioned, the term is undefined in state law. Affordable housing development is critical to meet the state’s housing goals and comply with the Regional Housing Needs Assessment (RHNA). It is conceivable that affordable housing could be interpreted as a public purpose in California.

FISCAL EFFECT: Appropriation: No Fiscal Com.: Yes Local: No

SUPPORT: (Verified 8/3/26)

City of Lynwood (source)
Diversity Builders Alliance

Los Angeles County Supervisor Janice Hahn

Lynwood Sports Association
Lynwood Unified School District
Lynwood Unified School District
Primestor Development
U.S. House of Representatives - Office of Congresswoman Nanette Barragan (CA-44)

OPPOSITION: (Verified 8/3/26)

None received

ARGUMENTS IN SUPPORT: Writing in support of this bill, Los Angeles County Supervisor Janice Hahn states, “California is in a housing crisis, and the State has made housing production one of its most urgent priorities. AB 1338 reflects exactly the kind of local-state partnership and creative problem-solving that is needed to meet that challenge. The City of Lynwood is a fully built-out community with limited land available for new development. Every city-owned parcel is precious, and the City has worked diligently to make the most of this one — completing environmental remediation, complying with the Surplus Land Act, and engaging in a thorough disposition process. AB 1338 removes the last structural barrier standing between Lynwood and the housing its residents need.”

ASSEMBLY FLOOR: 74-3, 5/27/25

AYES: Addis, Aguiar-Curry, Ahrens, Alanis, Alvarez, Arambula, Ávila Farías, Bains, Bauer-Kahan, Bennett, Berman, Boerner, Bonta, Bryan, Calderon, Caloza, Carrillo, Castillo, Chen, Connolly, Davies, Dixon, Elhawary, Flora, Fong, Gabriel, Gallagher, Garcia, Gipson, Mark González, Hadwick, Haney, Harabedian, Hart, Hoover, Irwin, Jackson, Kalra, Krell, Lackey, Lee, Lowenthal, Macedo, McKinnor, Muratsuchi, Ortega, Pacheco, Papan, Patel, Pellerin, Petrie-Norris, Quirk-Silva, Ramos, Ransom, Celeste Rodriguez, Michelle Rodriguez, Rogers, Blanca Rubio, Sanchez, Schiavo, Schultz, Sharp-Collins, Solache, Soria, Stefani, Ta, Tangipa, Valencia, Wallis, Ward, Wicks, Wilson, Zbur, Rivas

NOES: DeMaio, Ellis, Patterson

NO VOTE RECORDED: Jeff Gonzalez, Nguyen

Prepared by: Melissa White / TRANS. / (916) 651-4121

8/5/26 14:57:29

**** END ****

SENATE COMMITTEE ON TRANSPORTATION

Senator Dave Cortese, Chair

2025 - 2026 Regular

Bill No: Hearing Date: 6/30/2026

SUBJECT:

DIGEST: This bill requires the California Department of Transportation (Caltrans), upon request from the City of Lynwood, to develop and enter into an agreement with the city to transfer the deed restriction imposed on a property, as defined, to an adjacent property.

ANALYSIS:

Existing law:

1. Vests Caltrans with full possession and control of all state highways and all property and rights on property acquired for state highway purposes.
2. Authorizes Caltrans to acquire, either in fee or in any lesser estate or interest, any real property that it considers necessary for state highway purposes.
3. Defines “excess real property” to mean all land and improvements situated outside of calculated highway right-of-way lines not needed or used for highway or other public purposes, including, but not limited to, those leased to public agencies, as defined, and available for sale or exchange.
4. Requires Caltrans to adopt rules and regulations to determine which real property outside of calculated right-of-way lines is no longer needed or used for highway or other public purposes, and which is available for sale or exchange.

1. Authorizes Caltrans, if they determine that real property or an interest therein, previously or hereafter acquired by the state for highway purposes, is no longer necessary for those purposes, to sell, contract to sell, sell by trust deed, or exchange the real property or interest therein in the manner and upon terms, standards, and conditions established by the California Transportation Commission (CTC).

The bill:

1. Defines “Fernwood Avenue property” to mean the parcel owned by the City of Lynwood, located in the City of Lynwood between Fernwood Avenue and Imperial Highway, legally described and identified as Parcels 1 and 2 in the City of Lynwood Certificate of Compliance having Instrument Number 20250434105, and to be developed as affordable and market-rate housing.
2. Defines “Imperial Highway property” to mean the parcel located in, and owned by, the City of Lynwood, legally described in the California Department of Transportation Director’s Deed having Instrument Number 20170260321, and formerly identified as the California Department of Transportation Parcel Number DD 058166-01-01.
3. Requires Caltrans, upon request from the City of Lynwood, to develop and enter into an agreement with the city to release and remove the deed restriction imposed on the Imperial Highway property if all the following requirements are met:

1. The City of Lynwood agrees to transfer the deed restriction to the Fernwood Avenue property.
2. The Fernwood Avenue property is equal to or greater in size than the Imperial Highway property.
3. The Fernwood Avenue property is appraised at a value equal to, or greater than, the appraised value of the Imperial Highway property on a per-acre basis.
4. The deed restriction to be applied to the Fernwood Avenue property is 45 years, beginning on the date that the deed restriction is recorded.
5. Stipulates that the appraised value of the Imperial Highway property shall be based on the appraised value of the parcel at the time of its acquisition from the department, and the appraised value of the Fernwood Avenue property shall be based on the appraised value of the parcel at the time of the transfer of the deed restriction.
6. Requires the City of Lynwood, if they enter into an agreement with Caltrans, to submit a report to the Legislature, including the Assembly and Senate Committees on Transportation, on the use of the bill to develop the Imperial Highway property and the Fernwood Avenue property.
7. Requires the report to be submitted within one year of the agreement and annually thereafter until the planned development projects are completed.
8. Requires each report to include, but not be limited to, all of the following:
9. Plans for the development of the properties, including types of development.
10. The status of any pending projects on the properties.
11. The number of affordable housing units, affordability level, and size of units.
12. Any public financing or grants that were used to build the developments.
13. Contains findings and declarations to support the purpose of the bill.
14. Declares that a special statute is necessary because of the unique nature of the Imperial Highway property located in the City of Lynwood in the County of Los Angeles and the state’s goal and commitment to affordable and market-rate housing.

COMMENTS:

1. Purpose of the bill. According to the author, “AB 1338 would help the City of Lynwood resolve a unique land utilization issue in order to develop a mix of affordable housing and retail space for the benefit of the surrounding, underserved community. The larger project area will be designed and developed to provide affordable housing and public benefit to the City and would ensure that the public use remains for an extended time.”
2. Caltrans excess property. Under current law, Caltrans has the ability to sell or exchange property considered “excess,” meaning real property acquired by the state for a transportation purposes that is no longer necessary for those purposes. Excess property is sold at auction, either by an oral public auction or a sealed bid auction. Under certain circumstances, excess property may be offered for sale directly to adjoining property owners. It may also be offered for direct sale to public agencies if the property is to be used for a public purpose. Under state and federal law, Caltrans must set the price of excess property at current fair market value, however, Caltrans can offer property to public agencies for less than fair market value for a continued public use, such as parks.

CTC is tasked with developing the terms, standards, and conditions for any property sale. Additionally, CTC approves the final sale or transfer of any excess property at a public meeting.

The Federal Highway Administration (FHWA) also has requirements for the sale or lease of any excess real property in which federal funds were used in the original acquisition. This includes, as mentioned previously, that current fair market value must be charged, except for certain public interest exceptions, and the property must continue to be dedicated for a public use, as defined and allowed by FHWA. State departments of transportation must apply to FHWA for approval of transaction prior to action by CTC.

1. City of Lynwood purchased Caltrans property and cleaned it up. The City of Lynwood is a city in Los Angeles County located near South Gate and Compton and has a population of roughly 67,000. The city owns multiple adjoining parcels of land directly adjacent to Interstate 105 in the west part of the city that were purchased at two different times from Caltrans as part of the department’s excess property process. The so-called Fernwood Avenue property was purchased by the city in 2004. The so-called Imperial Highway property was purchased from Caltrans in 2016.

Both properties were purchased for fair market value and approved by CTC. As a condition of the sale, the Caltrans Director’s Deed, which conveyed the property, required that it be used exclusively for public purposes for a period of 15 years from the recorded date of the deed. The deed also states that if the property ceases to be used exclusively for public purposes Caltrans may terminate the deed, and the property would revert to Caltrans. Current state law does not define what a public purpose is for the purposes of Caltrans and CTC’s approval processes.

In authorizing the purchase of the Imperial Highway property, in 2016, the City of Lynwood approved a resolution stating that the purchase of the property would further the aims of the Housing Authority to promote the development and construction of low- and moderate-income housing opportunities in the city. Further, that the property is part of the larger site, when coupled with the previously purchased Caltrans property, and noting that the full site required major environmental remediation to be ready for development.

To better understand the extent of the environmental contamination, the city secured over $6 million in grant funding from the State Water Resources Control Board and the Department of Toxic Substances Control to investigate the site. The city determined the complete site needed extensive soil remediation before any uses would be allowable. Subsequently, the city spent approximately $10 million on the environmental cleanup.

1. Now the City wants to develop the property. The City of Lynwood has been working with a developer to design and construct a mixed-use development which would encompass both the Fernwood Avenue property and the Imperial Highway property. The planned development would include commercial buildings, affordable apartments, and for-sale townhomes. Specifically, the project is broken into two phases. Phase I includes commercial development with four new commercial buildings, including three drive-thrus and one multi-tenet retail space. Phase II includes a 54-unit affordable apartment complex. Half of the affordable units would be restricted for very low-income households, earning less than 50% Area Medien Income (AMI), and the remaining half for low-income households, earning less than 60% AMI. Phase II also includes 20 for-sale townhomes.

According to the City of Lynwood, the entire project has been environmentally cleared. The Phase I commercial development is ready to go to construction. The Phase II residential projects are currently in the design phase. Phase II would be partially funded by revenue from the commercial development. Additionally, the city is working with the developer on possible funding sources for the affordable housing components of the residential project. Specifically, the city is working with the Los Angeles County Development Authority (LACDA), which provides grant and loans from the Affordable Housing Trust Funds for capital funding, Section 8 Project-Based Vouchers (PBVs), and Project-Based Veterans Affairs Supportive Housing (PBVASH) Vouchers for the creation and operation of eligible permanent affordable multifamily rental housing units. However, the location of property for the Lynwood development may put the project in jeopardy.

LACDA’s most recent guidelines, published April 2026 prior to a new round of funding, included language specifically stating that housing projects located within 500 feet of a freeway may only be considered for funding if all other eligible projects have been considered for funding and funds are still available. Overall state and local policy discourage building affordable housing projects within 500 feet of a freeway, due to health concerns, especially regarding air quality. Only recently, with the passage of AB 2243 (Wicks, Chapter 272, Statutes of 2024), the Legislature expanded which housing projects are eligible for streamlined, ministerial review to those on a site located within 500 feet of a freeway. To qualify the projects must: have a centralized heating, ventilation, and air-conditioning system; have outdoor air intakes for the heating, ventilation, and air-conditioning system that face away from the freeway; have air filtration media for outside and return air that provide a minimum efficiency reporting value of 16; require air filtration media to be replaced at the manufacturer’s designated interval; and require the building to not have any balconies facing the freeway.

1. The City can’t locate the housing where the deed restrictions are. As described above, both properties that would include the multi-use development were purchased through the Caltrans excess property process. Both contained a 15-year deed restriction requiring the property to be used for a public purpose. Although public purpose is not defined in state law, the city expressed its intent to build affordable housing on the site. The 15-year clock on the Fernwood Avenue property has run out, meaning the city may develop the property for any type of use, including commercial. However, the deed restriction on the Imperial Highway property still has roughly 6 years.

The problem identified by the city and the reason for AB 1338 is that the Imperial Highway Property abuts Interstate 105, within 500 feet, and would therefore not be able to compete for needed affordable housing funds. Additionally, as mentioned, there are serious health and safety concerns with building housing that close to the freeway and it would require mitigation.

1. The City needs to swap. AB 1338 would essentially swap the deed restriction requiring development for public purposes from the Imperial Highway property to the Fernwood Avenue property. The city and the developer have moved forward with the project, planning for the Imperial Highway deed restriction to either be cancelled or swapped. As noted, they are ready to move forward with construction of the commercial development, which is currently slated for the Imperial Highway property site. Phase II of the project to build the residential units is being designed for the Fernwood Avenue site.

Specifically, AB 1338 requires Caltrans, upon request from the city, to develop and enter into an agreement to release and remove the deed restriction imposed on the Imperial Highway property. The bill further defines the requirements for the agreement including:

• The city agrees to transfer the deed restriction to the Fernwood property.
• The Fernwood Avenue property is equal to or greater in size than the Imperial Highway property.
• The Fernwood Avenue property is appraised at a value equal to, or greater than, the appraised value of the Imperial Highway property on a per-acre basis.
• The deed restriction to be applied to the Fernwood Avenue property is 45 years, beginning on the date that the deed restriction is recorded.

Additionally, to keep the Legislature up to date on the development project, the bill requires the city to submit an annual report on the use of the provisions of the bill to develop the properties. The report must include plans for the development of the properties, including types of development; the status of any pending projects on the properties; the number of affordable housing units, affordability level, and size of units; and any public financing or grants that were used to build the developments.

Writing in support of the bill, Los Angeles County Supervisor Janice Hahn states, “California is in a housing crisis, and the State has made housing production one of its most urgent priorities. AB 1338 reflects exactly the kind of local-state partnership and creative problem-solving that is needed to meet that challenge. The City of Lynwood is a fully built-out community with limited land available for new development. Every city-owned parcel is precious, and the City has worked diligently to make the most of this one — completing environmental remediation, complying with the Surplus Land Act, and engaging in a thorough disposition process. AB 1338 removes the last structural barrier standing between Lynwood and the housing its residents need.”

1. Do we need a bill to make it happen? The City of Lynwood originally contacted Caltrans District 7 in 2023 to request the removal of the deed restriction. Caltrans informed the city that the deed restriction was included pursuant to CTC’s procedures for the sale of excess property, and that Caltrans did not have authority to approve the city’s request to reassign the deed restriction and stating that, “parties are legally bound to follow the terms in the agreement.” According to the author, he contacted CTC in February 2025 on behalf of the city. The city and author communicated numerous times with CTC over the course of 2025, but no final resolution was reached. Additionally, the author introduced AB 1168 in 2025 to require Caltrans to release and remove the deed restriction on the Imperial Highway property. The bill did not move forward; however, the author sent a letter co-signed by Assembly Transportation Chair Wilson to CTC in August 2025 requesting assistance with the matter.

It is unclear who has the authority to possibly come to agreement with the city through administrative means and whether it is allowable under state law and policy. Caltrans is responsible for the identification, sale, and transfer of its excess property, including issuing a Director’s Deed with the terms of the sale and any restrictions. However, CTC is ultimately responsible for approving those actions through a vote of the commission in a public meeting. Additionally, FHWA must be involved if the property was originally purchased with federal funds.

Additional questions arise as to what activities are considered development for a public purpose under state and federal law and regulations. As mentioned, the term is undefined in state law. Affordable housing development is critical to meet the state’s housing goals and comply with the Regional Housing Needs Assessment (RHNA). It is conceivable that affordable housing could be interpreted as a public purpose in California. However, in a broader context, it is unclear if FHWA would agree, as any transfer would require their approval. This, however, is not relevant in the City of Lynwood’s case. It is extremely rare, but according to Caltrans, the Imperial Highway property was not originally purchased by Caltrans using federal funds.

Related/PREVIOUS Legislation:

AB 1168 (Solache, 2025) – Would have required Caltrans to release and remove the deed restriction that it imposed on a parcel transferred to the City of Lynwood that requires a portion of the property to be used exclusively for public purposes for a period of 15 years from the recorded date of the deed. AB 1168 was held in the Assembly Transportation Committee.

FISCAL EFFECT: Appropriation: Fiscal Com.: Local:

POSITIONS: (Communicated to the committee before noon on Wednesday,

June 24, 2026.)

SUPPORT:

City of Lynwood (sponsor)
Diversity Builders Alliance

Los Angeles County Supervisor Janice Hahn

Lynwood Sports Association
Lynwood Unified School District
Lynwood Unified School District (UNREG)
Primestor Development
U.S. House of Representatives - Office of Congresswoman Nanette Barragan (CA-44)

OPPOSITION:

None received

-- END --

ASSEMBLY THIRD READING

ATR Bill Id:AB 1338

Author:(Solache)

As Amended Ver:April 3, 2025

Majority vote

SUMMARY

Requires an owner or operator of a metal shredding facility to reimburse an Air Quality Management District or Air Pollution Control District (Air District) for reasonable regulatory costs incurred by the Air District in implementing facility-wide fence-line air quality monitoring requirements at metal shredding facilities.

Major Provisions

COMMENTS

California Hazardous Waste Control Law (HWCL): The HWCL is the state's program that implements and enforces federal hazardous waste law in California and directs the Department of Toxic Substances Control (DTSC) to oversee and implement the state's hazardous waste laws and regulations. Any person who stores, treats, or disposes of hazardous waste must obtain a permit from DTSC. The HWCL covers the entire management of hazardous waste, including hazardous waste generation, management, transportation, and ultimately disposal into a state or federal authorized facility.

Metal shredder facilities: California law defines a "metal shredding facility" as an operation that uses a shredding technique to process end-of-life vehicles, appliances, and other forms of scrap metal to facilitate the separation and sorting of ferrous metals, nonferrous metals, and other recyclable materials from non-recyclable materials. A "metal shredding facility" does not include a feeder yard, a metal crusher, or a metal baler, if that facility does not otherwise conduct metal shredding operations. As such, most scrap metal recycling facilities would not be subject to any proposed regulations meant to manage the waste generated from metal shredding facilities.

Metal shredder waste: The shredding of scrap metal (e.g., end-of-life vehicles) results in a mixture of recyclable materials (e.g., ferrous metals and nonferrous metals) and non-recyclable material (i.e., metal shredder waste). Aggregate is generated after the initial separation of ferrous metals and consists of nonferrous metals that can be further recovered and metal shredder waste. Metal shredder waste consists mainly of glass, fiber, rubber, automobile fluids, dirt, and plastics in automobiles and household appliances that remain after the recyclable metals have been removed. Because scrap metal contains regulated hazardous constituents, it can contaminate and ultimately cause metal shredder waste to exhibit a characteristic of hazardous waste for toxicity. In a 2002 draft report on auto shredder waste, DTSC showed that metal shredder waste often exceeded the soluble threshold limit concentrations (STLCs) for lead, cadmium, and zinc.

Non-hazardous waste classification granted to metal shredding facilities: Based on the hazardous characteristics of metal shredder waste, in many instances, metal shredding facilities are hazardous waste generators and are thus subject to hazardous waste requirements, including permitting, transportation and disposal. In the late 1980s, in an effort to relieve metal shredding facilities of these requirements, the Department of Health Services (DHS) (the predecessor of DTSC) determined that the metal treatment fixation technologies were capable of lowering the soluble concentrations of metal shredder waste such that the treated metal shredder waste was rendered insignificant as a hazard to human health and safety, livestock, and wildlife. Seven metal shredding facilities applied for and were granted nonhazardous waste classification letters by DHS and later DTSC if they used the metal treatment fixation technologies. The authority to issue these classifications is found in subdivision (f) of Section 66260.200 of Title 22 of the California Code of Regulations, and these determinations are now known as "f letters." These classifications ultimately allowed treated metal shredder waste to be handled, transported, and disposed of as non-hazardous waste in class III landfills (i.e., solid (nonhazardous) waste landfills).

Legislation to address impacts of metal shredding facilities: In 2014, Senator Jerry Hill introduced SB 1249 based in part on concerns about metal shredder safety due to recent fires at metal shredding facilities in his district, but also in response to the historic concerns about metal shredding facilities and their potential impact on the environment. The intent of the bill was that the conditional nonhazardous waste classifications, as documented through the historical "f letters," be revoked and that metal shredding facilities be thoroughly evaluated and regulated to ensure adequate protection of human health and the environment. SB 1249 (Hill), Chapter 756, Statutes of 2014 was signed by the Governor and authorized DTSC to develop alternative management standards (different from a hazardous waste facility permit) if, after a comprehensive evaluation of metal shredding facilities, DTSC determined that alternative management standards were warranted.

DTSC's implementation of SB 1249: DTSC's implementation of SB 1249 included: conducting a comprehensive evaluation of metal shredding facilities and metal shredder waste; determining if alternative management standards specific to metal shredding facilities could be developed to ensure that the management, treatment and disposal practices related to metal shredder waste are protective of human health and the environment; preparing an analysis of activities to which the alternative standards will apply and to make available to the public before any regulations are adopted; and, adopting emergency regulations establishing a fee schedule to reimburse DTSC's costs for the evaluation, analysis, and regulatory development for metal shredding facilities.

As part of this implementation, in January 2015, DTSC developed a three-year work plan to implement SB 1249. The work plan includes development of a treatability study on metal shredder wastes to demonstrate the highest level of treatment that can be achieved with the current technology, and an assessment of the potential for treated or untreated metal shredder waste to migrate off-site and impact residents or business occupants in the areas surrounding metal shredding facilities and landfills that accept metal shredder waste.

As part of the work plan, DTSC approved air monitoring summary reports for metal shredding facilities located in Bakersfield, Redwood City, and Terminal Island. Air sampling was conducted at the facilities during October 2016 to assess the potential for offsite emissions associated with the metal shredding operations.

Recent fence-line monitoring requirements: Citing concerns with metal shredding facilities, Assemblymember Bonta introduced AB 2851 (Chapter 743, Statutes of 2024). AB 2851:

1. Requires DTSC to require metal shredding facilities to monitor hazardous waste constituents, report on the results of that monitoring, and implement facility-wide fence-line hazardous waste constituent monitoring requirements;
2. Requires, on or before July 1, 2027, DTSC to develop a procedure for community notification of the public for the area in which a metal shredding facility is located, if monitoring indicates any release of light fibrous material;
3. Requires, on or before January 1, 2027, DTSC to develop regulations to implement, interpret, or make specific these requirements for metal shredding facilities; and,
4. Requires, on or before January 1, 2027, an Air District, if their jurisdiction includes a metal shredding facility, in consultation with DTSC and OEHHA, to develop requirements for facility-wide fence-line air quality monitoring at metal shredding facilities.

During the legislative process, Assemblymember Bonta stated the following: "Metal shredding facilities are disproportionately located in our most vulnerable and underserved communities already suffering from a disproportionate amount of pollution exposure, and in turn, disparate health impacts. AB 2851 will push forward the state's commitment in advancing environmental justice and equity for those who are impacted the most by toxic emissions. AB 2851 is needed to help support the creation of standards for metal shredders. Fence-line monitoring will give local municipalities an awareness of the ongoing sources of potential pollution and the community notification will benefit all who are living in the surrounding neighborhoods."

This bill: AB 1338 requires the owner or operator of a metal shredding facility to reimburse an Air District for reasonable regulatory costs incurred by the Air District in implementing facility-wide fence-line air quality monitoring requirements at metal shredding facilities.

According to the Author

"AB 1338 would ensure that emissions from metal shredding facilities are properly monitored and controlled by enforcing existing, robust local rules and regulations governing these facilities. We recognize the importance of monitoring and controlling emissions from metal shredding facilities to protect public health; however, given the limited resources available to local air districts, it is essential that local discretion is preserved to ensure that air quality resources are being used as efficiently as possible. This bill would ensure that fence-line monitoring is implemented when necessary while allowing local jurisdictions to utilize their expertise, discretion and knowledge of local facilities to adopt cost-effective strategies that provide effective air quality protection for surrounding communities."

Arguments in Support

According to the South Coast Air Quality Management District (AQMD):

"The bill would also require that air districts are reimbursed by facilities for reasonable regulatory costs relating to implementing AB 2851 requirements, similar to fence-line monitoring requirement situations regarding refineries and wastewater treatment plants.

In line with AB 2851's mission to reduce harmful emissions and protect public health, South Coast AQMD proactively implemented local regulations focused on addressing emissions from metal shredding facilities. Specifically:

Rule 1460 – Control of Particulate Emissions from Metal Recycling and Shredding Operations (adopted Nov. 4, 2022): This aims to minimize fugitive dust emissions from metal shredding facilities through requirements like facility registration, housekeeping, best management practices, signage, and recordkeeping.

Rule 403 – Fugitive Dust (most recently amended June 3, 2005): This mandates the implementation of best available dust control measures during active operations that could generate fugitive dust."

Arguments in Opposition

None on file.

FISCAL COMMENTS

According to the Assembly Appropriations Committee, there are no new state costs with this bill.

VOTES

ASM ENVIRONMENTAL SAFETY AND TOXIC MATERIALS: 7-0-0

YES: Connolly, Hadwick, Hart, Castillo, Lee, McKinnor, Papan

ASM APPROPRIATIONS: 15-0-0

YES: Wicks, Sanchez, Arambula, Calderon, Caloza, Dixon, Elhawary, Fong, Mark González, Hart, Pacheco, Pellerin, Solache, Ta, Tangipa

UPDATED

VERSION: April 3, 2025

CONSULTANT: Josh Tooker / E.S. & T.M. / (916) 319-3965 FN: 0000268

Date of Hearing: April 23, 2025

ASSEMBLY COMMITTEE ON APPROPRIATIONS

Buffy Wicks, Chair

ABPCA Bill Id:AB 1338

Author:(Solache) – As Amended Ver:April 3, 2025

Urgency: No State Mandated Local Program: No Reimbursable: No

SUMMARY:

This bill requires an owner or operator of a metal shredding facility to reimburse an air quality management district or air pollution control district (air district) for any reasonable regulatory costs incurred by the air district in implementing facility-wide fence-line air quality monitoring requirements at metal shredding facilities.

FISCAL EFFECT:

No new state costs.

COMMENTS:

1) Background. AB 2851 (Bonta), Chapter 743, Statutes of 2024, required air districts, in consultation with the Department of Toxic Substances Control (DTSC) and Office of Environmental Health Hazard Assessment, to develop requirements for fence-line air quality monitoring at metal shredding facilities by January 1, 2027. By July 1, 2027, air districts must adopt and begin enforcing these requirements. The bill also states that any reasonable regulatory costs incurred by an air district in implementing the bill may be reimbursed pursuant to its fee authority.

This bill is sponsored by the South Coast Air Quality Management District (SCAQMD), which notes that requiring local air districts to rely on their general fee authority to recover regulatory and implementation costs for AB 2851 is “burdensome on local air district resources and would likely require additional rulemaking activities.” SCAQMD states this bill seeks “to have air districts reimbursed by facilities for implementation costs, similar to other fenceline monitoring requirement situations relating to entities such as refineries and wastewater treatment facilities.”

DTSC reports it has not yet begun its implementation of AB 2851 due to a lack of resources.

2) Related Legislation. SB 404 (Caballero) of the current legislative session establishes a new regulatory structure for metal shredding facilities. SB 404 is pending in the Senate Judiciary Committee.

Analysis Prepared by: Nikita Koraddi / APPR. / (916) 319-2081

Date of Hearing: April 8^th, 2025

ASSEMBLY COMMITTEE ON ENVIRONMENTAL SAFETY AND TOXIC MATERIALS

Damon Connolly, Chair

ABPCA Bill Id:AB 1338 (

Author:Solache) – As Amended Ver:April 3, 2025

SUBJECT: Metal shredding facilities: regulations.

SUMMARY: Requires an owner or operator of a metal shredding facility to reimburse an Air Quality Management District or Air Pollution Control District (Air District) for reasonable regulatory costs incurred by the Air District in implementing facility-wide fence-line air quality monitoring requirements at metal shredding facilities.

EXISTING LAW:

1) Requires the Department of Toxic Substances Control (DTSC) to enforce the standards within the Hazardous Waste Control Law (HWCL) and the regulations adopted by DTSC pursuant to the HWCL. (Health and Safety Code (HSC) § 25180)

2) Authorizes DTSC, in consultation with the Department of Resources Recycling and Recovery, the State Water Resources Control Board, and affected local air quality management districts, to adopt regulations establishing alternative management standards (AMS) for metal shredding facilities for hazardous waste management activities within DTSC's jurisdiction as an alternative to the requirements specified in the HWCL. (The authority to adopt regulations for AMS for metal shredding facilities expired on January 1, 2018, therefore no AMS were ever adopted). (HSC § 25150.82 (c))

3) Authorizes DTSC to collect an annual fee from all metal shredding facilities that are subject to the requirements of the HWCL or to the alternative management standards adopted pursuant to HSC § 25150.82. Requires DTSC to establish and adopt regulations necessary to administer this fee and to establish a fee schedule that is set at a rate sufficient to reimburse DTSC's costs to implement the HWCL as applicable to metal shredder facilities. Authorizes the fee schedule established by DTSC to be updated periodically as necessary and requires the assessment to be no more than the reasonable and necessary cost of DTSC to implement the HWCL, as applicable to metal shredder facilities. (HSC § 25150.84 (a))

7) Defines "metal shredding facility" as an operation that uses a shredding technique to process end-of-life vehicles, appliances, and other forms of scrap metal to facilitate the separation and sorting of ferrous metals, nonferrous metals, and other recyclable materials from nonrecyclable materials that are components of the end-of-life vehicles, appliances, and other forms of scrap metal. "Metal shredding facility" does not include a feeder yard, a metal crusher, or a metal baler, if that facility does not otherwise conduct metal shredding operations. (HSC § 25150.82 (b))

8) Requires, on or before January 1, 2027, an Air District whose jurisdiction includes a metal shredding facility, in consultation with DTSC and the Office of Environmental Health Hazard Assessment (OEHHA), to develop requirements for facility-wide fence-line air quality monitoring at metal shredding facilities. (HSC § 41514.6 (a))

9) Requires metal shredding facilities to implement facility-wide air quality monitoring developed by Air Districts. (HSC § 41514.6 (c))

10) Requires, on or before July 1, 2027, an Air District that has a metal shredding facility within its jurisdiction to adopt regulations requiring facility-wide fence-line air quality monitoring at metal shredding facilities. (HSC § 41514.6 (d))

11) Authorizes, but does not require, the owner or operator of a metal shredding facility to reimburse an Air District for reasonable regulatory costs associated with implementing facility-wide fence-line air quality monitoring requirements. (HSC § 41514.6 (g))

FISCAL EFFECT: Unknown.

COMMENTS:

Need for the bill: According to the author, "AB 1338 would ensure that emissions from metal shredding facilities are properly monitored and controlled by enforcing existing, robust local rules and regulations governing these facilities. We recognize the importance of monitoring and controlling emissions from metal shredding facilities to protect public health; however, given the limited resources available to local air districts, it is essential that local discretion is preserved to ensure that air quality resources are being used as efficiently as possible. This bill would ensure that fence-line monitoring is implemented when necessary while allowing local jurisdictions to utilize their expertise, discretion and knowledge of local facilities to adopt cost-effective strategies that provide effective air quality protection for surrounding communities."

California Hazardous Waste Control Law (HWCL): The HWCL is the state's program that implements and enforces federal hazardous waste law in California and directs DTSC to oversee and implement the state's hazardous waste laws and regulations. Any person who stores, treats, or disposes of hazardous waste must obtain a permit from DTSC. The HWCL covers the entire management of hazardous waste, including hazardous waste generation, management, transportation, and ultimately disposal into a state or federal authorized facility.

Metal shredder facilities: California law defines a "metal shredding facility" as an operation that uses a shredding technique to process end-of-life vehicles, appliances, and other forms of scrap metal to facilitate the separation and sorting of ferrous metals, nonferrous metals, and other recyclable materials from non-recyclable materials. A "metal shredding facility" does not include a feeder yard, a metal crusher, or a metal baler, if that facility does not otherwise conduct metal shredding operations. As such, most scrap metal recycling facilities would not be subject to any proposed regulations meant to manage the waste generated from metal shredding facilities.

Metal shredder waste: The shredding of scrap metal (e.g., end-of-life vehicles) results in a mixture of recyclable materials (e.g., ferrous metals and nonferrous metals) and non-recyclable material (i.e., metal shredder waste). Aggregate is generated after the initial separation of ferrous metals and consists of nonferrous metals that can be further recovered and metal shredder waste. Metal shredder waste consists mainly of glass, fiber, rubber, automobile fluids, dirt and plastics in automobiles and household appliances that remain after the recyclable metals have been removed. Because scrap metal contains regulated hazardous constituents, it can contaminate and ultimately cause metal shredder waste to exhibit a characteristic of hazardous waste for toxicity. In a 2002 draft report on auto shredder waste, DTSC showed that metal shredder waste often exceeded the soluble threshold limit concentrations (STLCs) for lead, cadmium, and zinc.

Non-hazardous waste classification granted to metal shredding facilities: Based on the hazardous characteristics of metal shredder waste, in many instances, metal shredding facilities are hazardous waste generators and are thus subject to hazardous waste requirements, including permitting, transportation and disposal. In the late 1980s, in an effort to relieve metal shredding facilities of these requirements, the Department of Health Services (DHS) (the predecessor of DTSC) determined that the metal treatment fixation technologies were capable of lowering the soluble concentrations of metal shredder waste such that the treated metal shredder waste was rendered insignificant as a hazard to human health and safety, livestock and wildlife. Seven metal shredding facilities applied for and were granted nonhazardous waste classification letters by DHS and later DTSC if they used the metal treatment fixation technologies. The authority to issue these classifications is found in subdivision (f) of Section 66260.200 of Title 22 of the California Code of Regulations, and these determinations are now known as "f letters." These classifications ultimately allowed treated metal shredder waste to be handled, transported and disposed of as non-hazardous waste in class III landfills (i.e., solid (nonhazardous) waste landfills).

Legislation to address impacts of metal shredding facilities: In 2014, Senator Jerry Hill introduced SB 1249 based in part on concerns about metal shredder safety due to recent fires at metal shredding facilities in his district, but also in response to the historic concerns about metal shredding facilities and their potential impact on the environment. The intent of the bill was that the conditional nonhazardous waste classifications, as documented through the historical "f letters," be revoked and that metal shredding facilities be thoroughly evaluated and regulated to ensure adequate protection of human health and the environment. SB 1249 (Hill, Chapter 756, Statutes of 2014 ) was signed by the Governor and authorized DTSC to develop alternative management standards (different from a hazardous waste facility permit) if, after a comprehensive evaluation of metal shredding facilities, DTSC determined that alternative management standards were warranted.

DTSC's implementation of SB 1249: DTSC's implementation of SB 1249 included: conducting a comprehensive evaluation of metal shredding facilities and metal shredder waste; determining if alternative management standards specific to metal shredding facilities could be developed to ensure that the management, treatment and disposal practices related to metal shredder waste are protective of human health and the environment; preparing an analysis of activities to which the alternative standards will apply and to make available to the public before any regulations are adopted; and, adopting emergency regulations establishing a fee schedule to reimburse DTSC's costs for the evaluation, analysis, and regulatory development for metal shredding facilities.

As part of this implementation, in January 2015, DTSC developed a three-year work plan to implement SB 1249. The work plan includes development of a treatability study on metal shredder wastes to demonstrate the highest level of treatment that can be achieved with the current technology, and an assessment of the potential for treated or untreated metal shredder waste to migrate off-site and impact residents or business occupants in the areas surrounding metal shredding facilities and landfills that accept metal shredder waste.

As part of the work plan, DTSC approved air monitoring summary reports for metal shredding facilities located in Bakersfield, Redwood City, and Terminal Island. Air sampling was conducted at the facilities during October 2016 to assess the potential for offsite emissions associated with the metal shredding operations.

DTSC oversight of metal shredders: DTSC has inspected and taken various enforcement actions on metal shredder facilities, as well as metal recyclers. One facility to note is Schnitzer Steel Industries, Inc. (now known as Radius Recycling) located in Oakland, Alameda County. Schnitzer Steel owns and operates a scrap metal recovery and recycling facility, located at 1101 Embarcadero West, Oakland, California 94607 (Facility), occupying approximately 33.2 acres adjacent to the Oakland Inner Harbor waterfront and the Port of Oakland. Below is a brief summary of some enforcement actions against Schnitzer Steel:

1) In 2012, the Alameda County District Attorney’s Office, in consultation with DTSC and the California Department of Fish and Wildlife, initiated an investigation of the area surrounding the Facility in response to alleged releases of light fibrous material (LFM). On February 3, 2021, a Stipulation for Entry of Final Judgement and Order on Consent (Stipulation) was filed and approved by the Alameda County Superior Court. Schnitzer Steel agreed to a $4.1 million settlement over allegations that it violated the state’s environmental laws.

2) Due to concerns about ongoing releases of LFM, DTSC’s Office of Criminal Investigations conducted an air monitoring study and collected samples of LFM from the ground in the areas surrounding the Facility from December 2020 to May 2023.

3) On February 23, 2021, DTSC ordered Schnitzer Steel, through a formal enforcement action, to clean up contamination both on site and within the surrounding community, modify the facility as needed to prevent releases, and submit a plan to control immediate threats from metal shredding practices.

4) On March 30, 2022, a joint letter from DTSC, the Attorney General’s Office, and the Alameda County District Attorney’s Office (the "People") was sent to Schnitzer Steel notifying them of continued off-site releases and deposition of LFM from the Facility and how they are in violation of the February 3, 2021 Stipulation. The letter included actions Schnitzer Steel must take to stop these releases. After multiple rounds of communication and DTSC’s observations that LFM releases are still occurring, a final cease and desist LFM letter was sent to Schnitzer Steel by the People on July 31, 2023.

5) On August 9, 2023, a fire started in an unprocessed scrap metal pile at Schnitzer Steel’s Facility. DTSC issued violations to Schnitzer Steel for failure to operate the facility to minimize the possibility of a fire and for failure to immediately notify the State Office of Emergency Services that the facility had a fire.

Recent fence-line monitoring requirements: Citing concerns with a metal shredding facilities, Assemblymember Bonta introduced AB 2851 (Chapter 743, Statutes of 2024). AB 2851:

1) Requires DTSC to require metal shredding facilities to monitor hazardous waste constituents, report on the results of that monitoring, and implement facility-wide fence-line hazardous waste constituent monitoring requirements;

2) Requires, on or before July 1, 2027, DTSC to develop a procedure for community notification of the public for the area in which a metal shredding facility is located, if monitoring indicates any release of light fibrous material;

3) Requires, on or before January 1, 2027, DTSC to develop regulations to implement, interpret, or make specific these requirements for metal shredding facilities; and,

4) Requires, on or before January 1, 2027, an Air District, if their jurisdiction includes a metal shredding facility, in consultation with DTSC and OEHHA, to develop requirements for facility-wide fence-line air quality monitoring at metal shredding facilities.

During the legislative process, Assemblymember Bonta stated the following: "Metal shredding facilities are disproportionately located in our most vulnerable and underserved communities already suffering from a disproportionate amount of pollution exposure, and in turn, disparate health impacts. AB 2851 will push forward the state’s commitment in advancing environmental justice and equity for those who are impacted the most by toxic emissions. AB 2851 is needed to help support the creation of standards for metal shredders. Fence-line monitoring will give local municipalities an awareness of the ongoing sources of potential pollution and the community notification will benefit all who are living in the surrounding neighborhoods."

This bill: AB 1338 requires the owner or operator of a metal shredding facility to reimburse an Air District for reasonable regulatory costs incurred by the Air District in implementing facility-wide fence-line air quality monitoring requirements at metal shredding facilities.

Arguments in support: According to the South Coast Air Quality Management District (AQMD):

"This bill would amend existing law to provide local air districts with existing regulations for metal shredding facilities that meet specified criteria, as of January 1, 2026, the discretion to implement AB 2851 (Bonta, 2024) requirements, including universal fenceline monitoring at all metal shredding facilities. The bill would also require that air districts are reimbursed by facilities for reasonable regulatory costs relating to implementing AB 2851 requirements, similar to fence-line monitoring requirement situations regarding refineries and wastewater treatment plants.

Metal shredding facilities release emissions that pose significant risks to the health and well-being of nearby communities. This bill ensures that local air districts will have the authority to enforce strong regulations to limit these emissions. AB 1338 preserves the ability of local jurisdictions to use their expertise and knowledge of local facilities to adopt cost-effective solutions for improving air quality. By giving local air districts the flexibility to implement the most effective strategies, this bill balances regulatory oversight with local discretion.

In line with AB 2851’s mission to reduce harmful emissions and protect public health, South Coast AQMD proactively implemented local regulations focused on addressing emissions from metal shredding facilities. Specifically:

Rule 1460 – Control of Particulate Emissions from Metal Recycling and Shredding Operations (adopted Nov. 4, 2022): This aims to minimize fugitive dust emissions from metal shredding facilities through requirements like facility registration, housekeeping, best management practices, signage, and recordkeeping.

Rule 403 – Fugitive Dust (most recently amended June 3, 2005): This mandates the implementation of best available dust control measures during active operations that could generate fugitive dust."

Arguments in opposition:

None on file.

Related legislation:

1) SB 404 (Caballero, 2025). Establishes a comprehensive scheme for the regulation of metal shredding facilities administered by DTSC. This bill is pending action in the Senate Judiciary Committee.

2) AB 2851 (Bonta, Chapter 743, Statutes of 2024). Requires DTSC to require metal shredding facilities to monitor hazardous waste constituents, report on the results of that monitoring, and implement facility-wide fence-line hazardous waste constituent monitoring requirements. Requires, on or before January 1, 2027, an Air District, if their jurisdiction includes a metal shredding facility, in consultation with DTSC and OEHHA, to develop requirements for facility-wide fence-line air quality monitoring at metal shredding facilities.

3) SB 1234 (Allen, 2024). Would have established permitting requirements for new and existing metal shredding facilities. Would have required an owner or operator of an existing metal shredding facility, within 120 days after the effective date of this bill, to submit to DTSC, for review and approval, specified information that is required for a metal shredding facility permit. This bill was held on the suspense file in the Assembly Appropriations Committee.

4) SB 1249 (Hill, Chapter 756, Statutes of 2014). Authorizes DTSC to adopt regulations establishing management standards for hazardous waste management activities at metal shredding facilities until January 1, 2018.

REGISTERED SUPPORT / OPPOSITION:

Support

South Coast Air Quality Management District

Opposition

None on file

Analysis Prepared by: Josh Tooker / E.S. & T.M. / (916) 319-3965